ARRA Implementation

1. ARRA Implementation What Worked, What Didn’t, & What’s Next Colorado State Controller David McDermott, CPA

2. What Worked • Overall a phenomenal accomplishment • Nationwide implementation • Never before attempted • Seven months from signing to reporting • No dollars at the state level • Wide range of technical expertise • Significant language and knowledge barriers • Delivered on time without much acrimony

3. What Worked • People involved • Competent, committed, and altruistic • Willingness to suppress egos (and tempers) • Open and ongoing communication • Change to a batch submission process • Frequently Asked Questions format for guidance promulgation • Allowing recipient input to questions and answer content

4. What Worked • National organizations collectively interacting with OMB, RATB, and GAO • Friday morning calls – NGA, NASACT, NASBO, NASCIO, etc. • NASACT/DCA/OMB on the Supplemental SWCAP • OMB and RATB willingness to work with Federal agencies on a “single voice”

5. What Worked • Application Support at RATB • Responsive • Well informed • Creative • Consistent • Help desk • Managed high volume effectively • Generally pleasant and helpful • Appropriately raised issues for Federal management consideration

6. What Worked (for Colorado) • Policies on: • Aligning the definition of internal transactions with GASB 14 & financial accounting/reporting • Accounting systems flags for reportable vs. nonreportable and pass through vs. external spending • Prohibition against delegating reporting to subrecipients or being delegated reporting responsibility by another prime recipient • Centralized reporting

7. What Didn’t Work • Late changes to basic design elements: • Multiple versions and significant changes to the data model • Database structure, and data base hierarchy never clearly defined • Multiple CFDA numbers per grant award ID • DUNNS number and Award ID as a key data elements • one validated but not the other, • not communicated until changes to Award ID’s became late submissions

8. What Didn’t Work • Requiring recipients to provide information they didn’t know: • Treasury Account Symbols used exclusively at the federal level and unfamiliar to most recipients • Distinction between funding and awarding agency should be known by the Federal government, but may not be apparent to recipient

9. What Didn’t Work • The Tower of Babel: • Undefined terminology • Use of terms with audience specific meanings • Agency • Obligation – spent when obligated vs encumbered • Cryptic file submission error codes

10. What Didn’t Work • Multiple Masters: • Inconsistent directives from OMB and Federal agencies • Reporting path • Direct to FederalReporting.gov vs. direct to Federal agency • State =>FHWA=>State=>FederalReporting.gov • Reporting level • Award ID • Project • Jobs count • Specific identification formula vs. program specific methodologies

11. What Didn’t Work • Lack of time for training: • Federal level: • Communicating when OMB requirements would rule and when Federal agency would have discretion • Standardizing and streamlining the review process • State level: • Difficulty in identifying the right people – accountants, purchasing, grants/program staff, and POC • Changing requirements - increases confusion if training cannot be ongoing • Resource limitations

12. What Didn’t Work • Oversight cost recovery: • Basic flaw in the Act • S-SWCAP remedy less than satisfying • Unnecessarily time consuming and resource intensive for both DCA and recipients • Highly dependent on estimates where no valid estimation methodology exists • No workable provision for recovery from grants already expended or those prohibiting oversight costs • Requires ongoing adjustment to actual

13. What Didn’t Work • Initial design of FederalReporting.gov and related access controls: • Design focused on individual submissions • Ignored the potential for high volume and state’s need for centralized accumulation of data and reporting • Access Controls - Potential for disabling state’s centralized recipient reporting • Remedy drove batch submission process – an impressive comeback late in the game

14. What Didn’t Work • Jobs count • Objective conceptually flawed (not the implementation) • OMB calculation directives worked only for jobs specifically identifiable • Job retention – the magic “what if” scenario • Indefinable in year one – FTE cuts are not budgeted by position - management discretion allowed • Worse in years two and three – budgets don’t project FTE cuts this far out

15. What Didn’t Work • Federal agency review process • System processes and controls not described or communicated • Training by trial and error • Both sides overloaded by the volume • Programmed exception reporting such as jobs count “outside of parameters” • No appeals process to address Federal agencies requiring data change requests that states believed to be inappropriate

16. What’s Next • Recovery from the Recovery • Many states made ARRA a priority – they’re still catching up on their “normal” job • States have requested a change hiatus at least until April, 2010 • Recipients need to evaluate internal systems and redesign weaknesses • Time needed to automate systems where ad hoc manual processes were used

17. What’s Next • States may need to reconsider centralized vs. decentralized reporting and the benefits of a hybrid approach • Central office overload • Time commitment cannot be duplicated at fiscal year end • All parties should work on “many masters” and “single voice” problem • Solidify a consistent definition of internal versus external transactions considering the effect on “subrecipient” reporting